INTERVIEW: ‘Price of fertilizer under presidential initiative likely to go up’


The managing director of leading blender says with the current mode of operation of the initiative, there is a likelihood that fertilizers would be much more available to farmers this year.

Olajide Aogo, managing director, Matrix Fertilizer Limited (MFL), believes that so far, the Presidential Fertilizer Initiative (PFI) has been effectively and efficiently implemented under the watch of Nigeria Sovereign Investment Authority (NSIA) and Fertilizers Producers and Suppliers Association of (FEPSAN).

However, he said due to the imminent changes in the mode of operation of the PFI structure and the current forex rates, it is certain that fertilizers won’t be sold at N5000 per 50kg bag this year as it was sold in the previous year.

In this interview, he speaks about some of the challenges bedeviling fertilizer blending companies operations and the ways they are also contributing towards alleviating poverty, and the country’s quest to achieve food security.

Mr Aogo said with the current mode of operation of the initiative, there is a likelihood that fertilizers would be much more available to farmers this year than in the previous years.

MFL, located at Dumbin Dutse, along Kaduna-Zaria Road, is one of Nigeria’s leading fertilizer blending plants in terms of production of premium grade products at a competitive price.

The company, which was incorporated in 2018 as part of Matrix Energy Group’s contribution to food security and employment generation in Nigeria, currently has the capacity of blending a million metric tonnes of NPK fertilizer blends per annum.

Excerpt :

PT: What are your perceptions about Nigeria’s fertilizer industry?

Aogo: Matrix fertilizer limited is one of the companies under Matrix energy group. We are into NPK blending and trading of NPK fertilizers. All the raw materials we use are fertilizers on their own. What we do here is that we blend and we sell to farmers. If we’re talking about Nigeria’s fertilizer production, let me break it into two basically. Like I said earlier, this is a fertilizer blending plant. What that means is that we have other fertilizers, but the soil requires these fertilizers at different proportions, so we need to blend it in a manner that will be beneficial to the soil, so that it would be beneficial to the soil by boosting the soil nutrients for optimum yields. We have the primary or compound fertilizer and the blend. The compound fertilizers are the ones that we blend. In Nigeria, out of the four components that we blend together to get our NPK, two (Urea and Limestone granules) of these components are locally sourced, while the other two( Diammonium phosphate and Muriate potash) are imported. Speaking about my perception about the sector, I’ll be talking about whether we as blenders are meeting farmers’ demands or not. At present, for fertilizer utilisation in the country per hectare, I can say yes, we’re meeting up with the demand presently. We have the capacity to meet the Nigerian farmers’ fertilizer requirements or demands.

PT:We are aware that the Federal government initiated the Presidential Fertilizer Initiative(PFI) in 2016, which later kickstarted in 2017. How will you say that has fared so far?

Aogo: This company was incorporated in 2018 and we started blending in 2019. We joined the initiative in 2020. So my rating would be based on when we joined the initiative. Firstly, I will say it’s a good and lovely idea. The government meant well for the Nigerian farmers because they know that food security is so key and farmers are a critical part of ensuring that there is enough food to go round. Not just enough food, but that the food should be at affordable prices. So this is why the government actually initiated the program, and the program is actually meant for farmers to get fertilizers at affordable prices being one of the critical inputs required. This year, the program is still on, except that it has been restructured in a way. Last year, the government fixed a particular price and said that fertilizer cannot be sold for more than a particular price. They said it should be sold to farmers at a maximum price of N5000. This year, there’s just a little difference. That difference is that the price is not fixed yet, you can sell based on your cost of production but at a reasonable price and not at outrageous prices that farmers will not be able to afford. The major raw materials needed for blending are being delivered to us by the government, making sure that we get it at a competitive price which they’re also expecting us to transfer to farmers.

PT: So, are you saying that there’s a likelihood that fertilizer will not be sold at the N5000 rate it was pegged last year?

Aogo: Certainly, because a lot has changed. We have the impact of Forex on the cost of raw materials. So definitely it would not be sold at the rate of N5000 this year.

PT: How efficient has it been sourcing raw materials used in blending fertilizers from Europe and locally?

Aogo: Well, to a certain extent, the agency handling the supply side of the chain is the Nigerian Sovereign Investment Authority (NSIA), and pretty well, they have been doing their best. Good enough, this year they started early enough and I can say to a certain extent they’ve been doing it efficiently. This year, everybody is allowed to source for limestone, while the Urea is still part of what is being supplied by NSIA. Well, limestone is being sourced locally. We have it at Okpella in Edo state. Limestone functions as a filler. For fillers being used, we have limestone, dolomite and kaolin. We have them in different parts of the country. Edo state, Katsina, Bauchi, Niger and even in Abuja. So depending on what a blender decides to use. And also depending on formulations, because there are some formulations that don’t require much fillers.

PT: What are the major constraints bedevilling fertilizer production in Nigeria

Aogo: If I am to talk about the challenges, I will just talk about the typical challenges with manufacturers in the country. And these are Power, lack of good roads, because they’re going to transport their materials and this is done via road. So it’s not a challenge that is out of the ordinary. It is the same challenge any manufacturer is used to. Another thing about fertilizer also is that it is seasonal. There’s a time factor. Virtually everybody wants to get their fertilizers delivered within a short window time frame. But this year, people realize that they need to source ahead of time at least they’re taking advantage of early order.

PT: You mentioned earlier that you keyed into the Presidential Fertilizer Initiative last year, coupled with the emergence of the COVID-19 pandemic, how were you able to meet up with the demands?

Aogo: Last year we were here throughout the lockdown because they classified us as part of those offering essential services. So the lockdown policy didn’t really affect us as such because we were here. The only thing that affected us was that one of our sources of Urea which is Ndorama had an incidence of COVID-19 cases and that affected supplies of raw materials. That was just what affected our production last year. But this year, everything has been going smoothly.

PT: Despite the fact that the sourcing of raw materials has been effective so far like you mentioned earlier, a large chunk of farmers still lamented that they couldn’t get products at the designated price of N5000 pegged by the FG, why is it so?

Aogo: That should be last year, but if it’s about pricing, definitely that should be true because we are not getting raw materials at the same cost as last year. So definitely it will have an impact on the prices farmers will offtake the products. But the issue of availability shouldn’t come up this year. Fertilizers should be available this year.

PT: Are you saying farmers should be expecting more fertilizers this year, but at higher prices?

Aogo: Yes! But also, I cannot be speaking for the government because subsidy is a call of the government, not us. The government might decide to still say okay, since we’re producing at X amount of money, we want to subsidize it so that we would be able to give it to farmers at Y amount of money. So I don’t know what the government is thinking in that regard.

PT: Just to understand how you operate under the PFI programme, are you being mandated to produce a specific tonnage of fertilizers under this scheme in order to meet farmers ‘ demands or what? Please tell us what’s expected of you as a blending plant participating in the initiative.

Aogo: No! We are only mandated to ensure that we don’t sell the raw materials for purposes other than to produce fertilizers and sell to farmers. That’s it. And the government is very strict about that.

PT: We learned they are some blending plants currently being sanctioned for diversion of products (fertilizers). What are you doing to make sure that doesn’t happen here at Matrix fertilizer limited?

Aogo: It is by engaging trusted people to handle your transportation and by the way, we have our own trucks (Conveying vehicles ) that we use in evacuating our own products.

PT: What is your current production capacity like? Are you able to meet farmers’ requests?

Aogo: Annually, we have the capacity to produce over 500, 000 metric tonnes, and we just acquired another production line, so with that production line, it means we can actually produce a million metric tonnes in a year. That is if we work back-to-back from January to December.

PT: Who are your major off-takers?

Aogo: Well, I’ll not be specific, but I’ll put them in segments. I have direct farmers— commercial farms, agro-dealers basically, and the network of farmers. Those are the three major groups that buy from us.

PT: Can subsistence farmers come here to purchase from you?

Aogo: A subsistence farmer will not come here directly because we will not sell anything short of one truck. And the subsistence farmer that you talked about now is probably cultivating less than 1 hectare or 2 hectares. He doesn’t need more than 8 bags. For one 1 hectare, most farmers use about 4 bags of 50kg fertilizers(NPK) and two bags of Urea. Because they will spend more on transportation to get here just to obtain 4 bags of fertilizer, that won’t make much sense. But indirectly, we are still selling to subsistence farmers because agro-dealers who buy in bulk here will still take it to the farmers at the end of the day.

PT: So are they any direct benefit local farmers around here are deriving from your existence here?

Aogo: Yes! For instance last year, we partnered with the Kaduna state government to sell fertilizer directly to farmers so that they can get it at the same price we are selling here, and this year we’re still going to be part of such programme.

PT: How much are you selling a bag of NPK 50 kg fertilizer to buyers?

Aogo: For this year we can say the exact price it will cost because raw materials are getting tons in tranches. The price we are going to sell will depend on the cost of the materials getting to us per tranche.

PT: How much were you selling a bag of NPK 50kg fertilizer to buyers last year?

Aogo: We were following the government rules. So we did not sell beyond the N5000 regulated price. When we took it to those locations, we sold it for N5000.

What we were doing last year was contract blending. We were contracted to produce for the government, so even the sales were coordinated by them. They will just tell you this person has already paid, so supply him. That was what was happening.

Source: Premium Times

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